EFCC: Unethical practices by bank officials behind some banks’ collapse

EFCC: Unethical practices by bank officials behind some banks’ collapse

The Economic and Financial Crimes Commission (EFCC) has stated that certain banks’ failures were caused by poor leadership from senior executives.

This was disclosed by EFCC Chairman, Abdulrasheed Bawa on Wednesday, August 10, 2022.

He spoke at a workshop in Lagos with the theme “Effective Investigation and Prosecution of Banking Malpractices that Led to the Failure of Banks” in which the EFCC Chairman, , addressed a cross-section of industry players.

In order to prevent bank failure, the police officer urged relevant parties to take cooperative action.

Bawa claimed that a pattern emerged from the forensic study of the annual reports, statements; as well as other financial records of bankrupt banks analysed by the EFCC.

He expressed regret that banks had fallen short of expectations due to fraud, poor management, inexperience; aligned with an initial lack of regulatory laws and authorities while being represented by Ahmed Ghali, EFCC Lagos Zonal Commander.

Bawa remembered   that between 1930 and 1958 when several banks were closed, the industry initially encountered difficulties.

He said that more than 20 incidents, including those involving Alpha Merchant Bank; Financial Merchant Bank, and Republic Bank, were documented prior to the establishment of the Central Bank of Nigeria (CBN).

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According to the EFCC Chief, the CBN raised the minimum paid-up capital of banks from N2 billion to N25 billion in 2004; particularly in an effort to preserve the sector.

Following the adoption of the policy which reduced the number of banks from 89 to 25;the CBN created a new policy in 2010.

It was intended to divide banks into functional divisions and provide various capitalization levels; as opposed to the present minimum capital requirement of N25 billion.

The EFCC Chairman said the policy exposed that a number of financial institutions did not just fail; but were destroyed by identifiable people.

“The tragic collapse of some of the failed banks evidenced that the banking industry has been cajoled and manipulated by human beings and smart fraudsters.

“In some of the failed banks, the management stole billions of Naira in the name of borrowing. Some even gambled with depositors’ funds to speculate on the stock market and manipulate share prices.

“Some banks granted loans to billionaires and captains of industries whose wealth actually was money belonging to the poor which they “borrowed” and refused or were not able to pay back”, he added.

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